Price tag of Europe's Galileo satellite rises again

(BRUSSELS) - The price tag of Europe's much-delayed and over-budget Galileo satellite navigation system rose by another 1.9 billion euros on Tuesday, amid reports a contractor derided the project as "stupid."

Previously estimated to cost 3.4 billion euros, the European Commission said the additional funding was needed to complete the constellation of satellites, raising its price tag to 5.4 billion euros ($7.2 billion).

Aimed at rivalling the US-built Global Positioning System (GPS) and Chinese and Russian projects, the system needs more cash due to the higher costs of the development phase and satellite launchers, the commission said.

"3.4 billion euros is not enough to complete the infrastructure resulting from the Galileo programme," the European Union executive wrote in a policy paper.

In addition, the commission said the operating costs for Galileo and a sister system called EGNOS will amount to 800 million euros a year.

Galileo is scheduled to go online in 2014 with a constellation of 18 satellites.

But the commission said an extra 1.9 billion euros is needed to launch 12 more satellites by 2020 and offer the full services promised by the project.

The head of German firm OHB Technology, which was awarded a 566-million-euro to develop 14 Galileo satellites, was suspended by his firm after he criticised the project in a US diplomatic cable published by the WikiLeaks website.

According to an October 2009 cable from the US embassy in Berlin, OHB Technology chief Berry Smutny said: "I think Galileo is a stupid idea that primarily serves French interests."

He went on saying Galileo was "a waste of EU taxpayers' money championed by French interests," according to the cable.